As coronavirus continues to take the world by storm, politicians everywhere are in a race against time to implement emergency measures to help their people and the economy.
Italy, which has become the epicenter of the global pandemic, recently moved to suspend rent and mortgage payments as the country continues to grapple with the crisis. Laura Castelli, Italy's deputy economy minister, publicized the decision last week, confirming that the policy will apply to both "individuals and households."
Since the announcement, there is a push for other nations, including Canada and the U.S., to make similar moves.
In the U.S., several cities including New York, Seattle, and San Francisco have already implemented moratoriums on evictions as a way to support residents who may not be able to keep up with monthly payments due to the coronavirus pandemic. Property owners will not be able to issue new eviction notices, and those existing will not be executed until further notice.
"The thinking is that forcing people to move out of their homes during a global pandemic—when we should all be practicing social distancing—will only make it easier for the virus to spread," explains Christian Britschgi, a writer for Reason Foundation. "That's an entirely reasonable concern."
While such measures serve to protect residents, some are still calling for governments to take it a step further and temporarily suspend rent and mortgage payments altogether.
"We are now reaching a point of this crisis when something dramatic needs to be done to prevent a recession," writes Charles Mudede of The Stranger. Mudede makes the point that if, like Italy, the U.S. were to suspend mortgage payments, such would have a much "deeper effect" since property ownership rates are higher in the U.S. (around 65%) than in Italy.
"What must also be considered is the suspension of all rents as well, and this should include those imposed on small businesses."
On the other side of the debate, some people are skeptical that a "mortgage holiday" will actually come to America. Kathleen Howley, a writer for Housing Wire, explains that most American mortgages are packaged into bonds with legal terms that limit what mortgage servicers are able to do to help. At most, suspensions will likely just occur on a case-by-case basis.
Still, mortgage servicers are being reminded that hardship forbearance is an option for those who are financially struggling due to the coronavirus pandemic. The Federal Housing Finance Agency urges mortgage servicers to help borrowers wherever they possibly can.
In Canada, the B.C. Government Employees' Union is urging both federal and provincial governments to suspend rent and mortgage payments until the coronavirus pandemic is over to "make sure working people can afford to do the right thing."
Stephanie Smith, BCGEU President, stresses that the suspension is necessary as workers will need time off for self-isolation or quarantine, and that could result in a pay decrease which may impact their ability to meet payment deadlines. She also says the suspension would also help mitigate one of the major economic pressures that compel people to keep working even if they have been exposed to the coronavirus or are symptomatic.
"I absolutely think it’s the correct call," said James Laird, CEO of mortgage broker CanWise Financial, to HuffPost Canada. "If we get to the point where ... the income of Canadians is materially disrupted, then I think that all stakeholders involved ― from the homeowner to mortgage provider to regulators―would be in favor of providing temporary relief."
Another consideration is that high household debt levels are the biggest threat to the country's financial stability, according to the Bank of Canada. If a recession were to occur due to the coronavirus pandemic, it may be in the Bank's best interests to consider emergency relief measures to prevent those debt levels from rising.
In Ontario, NDP Leader Andrea Horwath has declared that the official opposition has been working with the government to help draft and pass emergency legislation that includes measures that will protect renters and borrowers.
"The NDP will be working hard to ensure the emergency legislation helps people take time off work without losing a paycheque,” she said. “We want to ensure no one faces consequences for missing a rent or mortgage payment through no fault of their own."
Photo by Giuseppe Milo
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